Novartis India will be shifting its India headquarters from Sandoz House on Dr. Anne Besant Road in Mumbai's plush Worli area where it has been housed for over 45 yearsKailash Babar | ET Bureau | Updated: June 12, 2017, 13:58 IST

MUMBAI: Swiss multinational pharmaceutical major Novartis' India arm has entered into an agreement to pick up over 1lakh sq ft office space in a commercial project, Inspire BKC, in Mumbai's secondary business district Bandra-Kurla Complex, said two persons familiar with the development. This is one of the largest front-office commercial transactions in terms of space in the country's financial capital so far this year.

Novartis India will be shifting its India headquarters from Sandoz House on Dr. Anne Besant Road in Mumbai's plush Worli area where it has been housed for over 45 years. One of the divisions of the company would continue to operate from Sandoz House.

The total tenure of the lease for the space spread over two floors in this new commercial project of Adani Realty is five years with the option to renew it for the next five years.

“The transaction was in the making for the past 6-8 months and the Letter of Intent (LOI) has finally been signed now after a thorough due diligence undertaken by Novartis India,“ said one of the persons mentioned above.

The drug maker will be paying lease rental of about ` . 215 per sq ft a month for the space taking the annual rental to nearly ` . 26 crore. The rentals will be reset after the first three years of the tenure. As per the terms of this transaction, the company will also get signage rights on the building.

“Novartis India has been looking to move its offices in Mumbai to a more modern, environmentally friendly , cost-effective building for several years now. While we have looked at several options, we are yet to take a decision,“ said a Novartis spokesperson in an email response.

ET's email query to Adani Realty remained unanswered till the time of going to press.

The company is expected to start working on fit-outs soon and will be operating out of this facility by the end of this year, becoming the first large multinational anchor occupier in this building.

On the back of declining interest in the traditional central business district (CBD) of Mumbai, several corporations are establishing their front-office functions in the secondary business districts (SBDs) and moving back-office activities to the suburban markets.

In the recent past, pharmaceuticals major Merck India moved its head office to Vikhroli from Worli, Siemens India also shifted one of its offices to Vikhroli from Worli. Volkswagen and DHL shifted their head offices to Andheri from Bandra.Dow Corning also relocated its India corporate office to Kanjurmarg, a suburb of Mumbai, from BandraKurla Complex, while Johnson & Johnson relocated to Jogeshwari from Tardeo in south Mumbai.

Recent trends in transactions indicate that the office property market in the country's commercial capital continues to flourish. Low vacancy levels across office complexes and lack of new ready-to-move-in commercial space are contributing to the rents firming up as well.